Kroger Countersues Albertsons Over Merger Breakdown, Citing 'Misguided' Campaign — Retail Sentiment Perks Up
The alleged misconduct, Kroger said, included Morris's “secret communications” with C&S's CEO and others to advance Albertsons's strategy.
FollowThe alleged misconduct, Kroger said, included Morris's “secret communications” with C&S's CEO and others to advance Albertsons's strategy.
Shares of Kroger slipped more than 1% on Tuesday after the grocery chain reportedly filed a counter lawsuit against fellow grocer Albertsons, with retail sentiment staying bullish.
Kroger was slapped with a lawsuit by Albertsons late last year after its $25 billion merger collapsed due to regulatory hurdles.
Kroger alleged in court that while it was working "diligently" toward sealing the merger, Albertsons, along with divestiture buyer C&S Wholesale Grocers, was pursuing its own regulatory strategy through a "secret and misguided campaign."
“Albertsons's misconduct shockingly came to light in the middle of the antitrust trials under government cross examination of Susan Morris, Albertsons's recently promoted CEO designate,” the company said in the statement.
The alleged misconduct, Kroger said, included Morris's “secret communications” with C&S's CEO and others to advance Albertsons's strategy.
That resulted in C&S criticizing the divestiture package it had voluntarily agreed, ultimately causing regulators to believe that C&S was an inadequate divestiture buyer.
Kroger has also claimed that Albertsons is not entitled to the $600 million termination fee under the terms of the parties' merger agreement, nor any other damages.
After the lawsuit, Albertsons maintains that it is “steadfastly committed” to the merger and that “Kroger did not hold up its end of the bargain,” Grocery Dive reported citing a spokesperson.
Sentiment on Stocktwits improved to ‘bullish’ from ‘bearish’ a week ago. Message volume turned ‘extremely low.’
Earlier this month, Kroger’s former chairman and CEO, Rodney McMullen, was ousted following a board investigation connected to his personal conduct that the company said was unrelated to the business.
Kroger's most recent quarterly earnings per share came in at $1.14, better than the estimate of $1.11. Revenue stood at $34.3 billion, missing the consensus estimate of $34.67 billion.
Kroger stock is up 5% year-to-date.
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